We’ve already written about India’s complicated relationship with bitcoin. Even though it’s not illegal to own, buy or sell cryptocurrencies in the country, the Reserve Bank of India has imposed a de facto ban on financial institutions dealing in virtual currencies since April 2018. The move was contested in courts and brought up to the country’s Supreme Court, but it’s been a slow mover.
In April 2019, a hearing was supposed to settle the matter once and for all, but the decision was postponed until at least July 23, after the court’s Summer break. In the meanwhile, buying and selling cryptocurrencies in local currency has been a cumbersome endeavour, as RBI’s instruction forbids banks to have any association with cryptocurrencies.
While they still wait for a more definite solution, local operators had to get creative in order to cater to the INR market. Read on to find out how to buy bitcoin in India.
Buying bitcoin with Indian Rupees (INR)
With the RBI instruction still in place, buying BTC with Indian Rupees demanded quite some creativity from the exchanges that still manage to operate with fiat in the country.
Indian crypto exchanges
Ingeniously, the way these exchanges found to go around the de-facto banking ban is to match traders cashing in and out in a P2P system that mimics Localbitcoins. This way, the exchange avoids any connection between crypto transactions and the banking system, and deposits/withdrawals become just bank transfers between individuals.
Basically, the process goes like this:
Alice wants to buy 1 BTC using her Rupees. She requests a deposit in the platform and waits for a match;
Bob has 1 BTC and wants to cash out, matching Alice’s request;
Alice transfers funds into Bob’s bank account, and both parties confirm it in the platform;
The INR amount is credited to Alice, and Bob can spend his Rupees elsewhere.
Pros: buy locally, in INR, with a simple bank transfer. Trade within the platform just like any other exchange.
Cons: slow, as it can take time to match buyer and seller.
Koinex is one of the earliest Indian exchanges, and one of the pioneers in implementing this solution. They explain the process for depositing and withdrawing in two short video tutorials:
Following suit, Pocketbits is another innovator in the Indian crypto space, and the process to deposit and withdrawing INR is virtually the same. They explain the whole process in detail in their FAQs.
Dedicated OTC marketplaces
Other global platforms offer over-the-counter trading, matching buyers and sellers through an escrow service that guarantees funds are properly transferred.
The most notable example is Localbitcoins, the first such platform and a global reference in P2P trading.
Buying bitcoin on international exchanges
If all else fails, you can always try to buy bitcoin through international exchanges by using a credit card or an international wire. Beware, though: going this way tends to be more expensive, and - given RBI’s position - might lead to banking problems.
For more information, check out our comprehensive guide on how to buy bitcoin.
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